Market Wrap: BTC Not Quite Ready to Stay Above $25K

BTC briefly touches $25,000 in overnight trading

Bitcoin (BTC) briefly broke through the psychologically significant $25,000 mark in overnight trading, before paring those gains during U.S. trading hours.

The largest cryptocurrency by market capitalization reached as high as $25,212 early in the U.S. trading day before retreating to its current level above $24,000.

This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

Ether’s (ETH) price declined 4% on Monday, but it remained above the $1,900 level it has maintained since late last week. In overnight activity, ETH briefly surpassed $2,000.

Both BTC and ETH traded on average volume, using the 20-day exponential moving averages (EMA) as a barometer for normality.

Traditional markets started the week relatively flat, with the S&P 500, Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq composite up 0.1%, 0.2% and 0.3% respectively.

Commodities were in decline, with the prices of crude oil and natural gas down 4% and 1.3%, respectively. The price of gold, a traditional safe haven asset, contracted 1.09%, while copper’s price sank 1.7%.

BTC’s hourly chart highlights the attempt to surpass $25,000

The hourly chart below illustrates BTC's brief move above $25,000 before it retreated.

However, that move occurred within a candle that finished the hour in negative territory, indicating that bitcoin isn’t ready to hold $25,000 support. A trading candle illustrates an asset's high, low, opening and closing price within a chart. Bitcoin’s price rose 2.7% before the start of U.S. trading before declining 3.5%.

BTC appeared to be settling into a range between $24,000 and $25,000, with trading volume recently declining. A lack of trading volume for an asset can imply lesser trader conviction about an asset’s potential gains.

Bollinger bands on BTC’s daily chart indicate a reversion to mean

BTC’s Bollinger bands indicate that prices may retreat to $23,500. For context, Bollinger bands measure the moving average for an asset and calculate values that are two standard deviations above and below the aforementioned moving average.

Traders often use Bollinger bands to determine whether prices have drifted too far from an asset’s short-term average. The question that Bollinger bands attempt to answer is whether an asset’s price is excessively high or low compared with its recent activity.

Traditionally, when prices breach the upper range of the Bollinger band, investors see them as being too high. Conversely, when an asset’s price breaches the lower end of its bollinger band, investors view them as too low.

Because the bands are based on standard deviation of price moves, they contract when volatility decreases and expand when volatility increases.

In BTC’s daily chart, prices on Monday have been flirting with the upper range of its bands. On several occasions BTC’s price has reverted to the mean/middle band following instances where it touched the upper and/or lower bands.

Investors can look at what happened on July 30, July 20 and July 8 as examples of this reversion. Should BTC prices behave as they did during those past occasions, BTC's price would revert to $23,500.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.